Last week Double from DoubleOurMoney suggested that I spend some more time talking about cashflow and where I’m at in my progress with it. It is, after all, my main goal: to boost my monthly cashflow from diverse, global sources to a point where I have gained significant options regarding how I can spend my working life. I’m not looking for schedule-free days on the beach 24/7 or indulgent tour packages or shopping sprees, although these might be good for some people. I just want a serious buffer from the immediate demands that money causes. I don’t even need a complete income replacement at this point. I just want a window with a good breeze coming through. Does that make sense?
What I’d really like the extra cash for right now would be to pay for the education I’d really like in the exact program and university of my choice – rather than hoping for some fellowship or scholarship and clawing around with all the other crabs in the bucket that also need that all-important fellowship (which then can also determine where you end up going). I’m so tired of that kind of competition. Graduate research really needs to be better funded, all around. You’re asking people to give up a significant chunk of their earnings and mental life to follow university regulations, administrators, stress-out, wrack their brains, maintain some degree of a personal life and struggle to produce significant, society-enhancing research in there too. It’s a strange and often very unhealthy psychological environment. Recently in Canada there’s been a lot of attention given to the new volunteer fundraising campaign for the Beijing athletes. I guess athleticism, like sports in general, always attracts more attention than a new and interesting article in a social science journal, or an important book with a new argument about the social interpretation of XYZ. It’s great for the athletes to have funding, of course – everyone wants to pursue their dreams – but I guess everyone feels left out when more money doesn’t come their own way. Then again, I am living below the federal poverty line here:)
After education, well, investing is still really high a priority on my list. I really need to build up my asset base in order to increase future cashflow and provide me with more options. This is the time in my life when I need to really work hard at building that base in order to give it enough time for compounding into the future.
After investing, I’ll buy a small house or condo, hopefully with 100% cash. I’ve read opinions this way and that about whether it will be good or not to carry a mortgage or even own a house in the ensuing economic climate, but I figure, you’re going to have to live somewhere anyway, and no matter whether you rent or pay a mortgage, there’s going to be some living cost (unless you’re able to always crash at a friend’s, or strike some other deal). It would be nice to just get this part out of the way and own your living space free and clear. If I can boost my cashflow enough to allow me to carry a monthly mortgage, that would be excellent, because I definitely don’t have any other sources of windfalls or inheritance or other monetary gifts that will help me out.
Notice how I haven’t even mentioned any gadgets, cars, clothing, or other consumer goods yet. I’m shooting right at what matters most first. Can’t waste any time here. I’d say probably 80% of my current income goes right towards my investments. You bet I’m using credit cards – like yo-yos – to make up for any shortages I have each month.
My sources of monthly income until my next source of funding comes in (beginning with the largest amount first):
credit cards (2)
reinvested dividends (not technically income since they’re reinvested)
cash dividends
reinvested interest (again, not technically income)
quarterly tax rebate cheque from the government
bond interest (once a year in January)
this blog (not much, but July figures did just about double from June. My blog is not about making money from blogging, so I don’t like to dwell on it, but I’ll say that insofar as I’m any degree of help here sharing my own knowledge and research time – that if some income comes in for me while doing so, this seems fair. To that end, if there’s anything I can help you with, let me know. I’m passionate about motivating others about their own investment plans and knowledge!)
My Next Strategies
First, I’m trying to build up my dividend portfolio so that I receive a paycheck every week. Then I’m going to build it up slowly so that the paycheck is significant enough so that it can grow itself while I earn money and work elsewhere.
But I’ll need to improve my investing tricks too. I’m going to be learning forex (eToro has contacted me about doing a review of their platform), and the technique of using ETF Covered Calls that RichSlick and the CollegeAnalysts have so successfully used already. In fact, RichSlick’s overall strategy is pretty intelligent and I’d do well to find something similar that works for me. His analogy of sending your parcel to its destination using both regular mail and purolator is especially insightful. If one messenger fails, you can fall back on the other. Worst that will happen is your package doesn’t get there as fast.
How does this sound? Do you have any other ideas I should be trying? If you’d like to teach me ETF Covered Calls, be my guest. I’m going to be entering the options arena very slowly and carefully. Please do leave a comment below, email me, or subscribe to my feed for updates and come back soon.
That’s my cashflow plan in a nutshell. Doesn’t sound like much, I know. But I feel the secret is in there, and it excites me. I know it will work. It’s amazing I hadn’t figured it out yet already. I knew all the pieces but didn’t really put them together until recently. It took a small paradigm shift. I had to let go of certain dogmatic rules about investing that I had set up for myself in order to keep things simple while I was still an undergraduate. Not anymore!
I’ll update you when I have my weekly paycheck in place, and then again when it reaches significant milestones. And of course, whenever I do start forex and options, I’ll tell you all about that, too.
Awesome Articles on Cashflow:
The Dough Roller – Multiple Income Streams: 10 Ways to Earn Extra Income
Moolanomy – 40+ Alternative Income Ideas and Resources
Living Off Dividends – How Passive Is Your Passive Income?
Frugal Dad – How To Make Your Income More Passive
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{ 5 comments… read them below or add one }
Thanks for the mention in your blog. I feel it is important to have a plan and always try to do better than your plan.
Outstanding that 80% of your current income goes to your investments.
thanx for mentioning me!
Great post. Cash-flow is king.
In the end, a positive cash-flow creates wealth and the methods to increase your cash-flow are infinite. Those methods and instructions on how to implement them is what personal financial planning is all about.
Double – Yeah, fortunately I’m in a short-term situation where I’m able to do that much. It would be nice if it were always possible.
Curt – yes, I think that sufficient cashflow is really potentially the cornerstone of any financial plan, because it can also act as an emergency fund, investment pool, or whatever. It can definitely create some breathing room. But Living Off Dividends has definitely had much more success with cashflow so far than I (I’m just younger, my situation has been different) – everyone should check out his success too. It’s very inspiring!
Admirable goals!
And, yes, thinking cash flow is huge. Too
many people get into the mindset of just
wanting to earn more per hour or per job
but financial independence only comes when
you figure out how to create assets that
pay you again and again.
I’m working on doing it through writing,
which is my passion. :)